Dividend Viewpoint

Perspectives on dividend investing in today's markets

The Importance of Dividends and the Impact of the Pandemic

Article Summary: The pandemic-driven shutdown of much of the global economy—and the uncertain path to recovery—are weighing on nearly every aspect of the investment landscape. What will happen to dividends? It’s a fair question that involves a paradox.

If we are in for a period of muted equity returns—an environment where at least some companies' dividends may be at risk—dividends may have increased importance.

The Quality-Based Differences Developing in Dividends

Article Summary: Dividends have always been a major contributor to total S&P 500 returns, and they have even been responsible for the majority of stock returns in difficult times (e.g., during the 1970s). Quality metrics provide an important lens for examining dividend risk in challenging environments, including the current crisis. Dividend cuts have begun, and we see an interesting split developing.

Only one-fifth as many dividend cutters and eliminators have come from the top quintile of the S&P 500 by credit rating. Nearly five times that number have come from the bottom quintile.

The Dividend Growth Advantage: Resilience for Today's Markets

Article Summary: So far, just one company among the S&P 500® Dividend Aristocrats®—an index consisting of companies that have increased their dividends for at least 25 consecutive years—has cut its dividend. What is the likely source of their resiliency, both current and historical? Quality.

The Dividend Aristocrats have a high distribution of companies at the top of credit ratings. Higher-quality has been closely associated with dividend resiliency during previous market disruptions, and it may support similar resiliency in today’s pandemic-driven market.

Discovering the Dividend Growth Advantage Beyond Large Caps

Article Summary: Amid the tug-of-war between improving economic data and a resurgence of the coronavirus in the United States and around the world, dividend cuts have continued. But we have seen a pattern of resilience from quality mid- and small-cap companies with consistent records of dividend growth.

S&P and Russell both systematically remove companies from their dividend growth indexes that make cuts. As of July 31, there have been only two companies cut from the S&P MidCap 400® Dividend Aristocrats® Index and only seven companies cut from the small-cap Russell 2000® Dividend Growth Index.

Beware the Value Trap

Article Summary: After this year’s run-up in technology and growth stocks, many investors may need to rebalance their portfolios. Here we take a look at some alternatives: value stocks and dividend growth strategies. With stable earnings, strong balance sheets and durable business models, companies that have consistently grown their dividends for at least 25 years may present quality at a reasonable price. They’re a robust alternative to large-cap tech and growth stocks and may be a compelling choice.

For more than 15 years, value stocks have lagged growth stocks, with the S&P 500 Value Index delivering cumulative returns of 160.01% versus the S&P 500 Growth Index’s more substantial 431.40% (7/31/06-11/30/20). But even though value stocks look cheap, that doesn’t mean they’re poised to rebound. They may represent a “value trap,” staying undervalued for a long time.

Dividends Have Stabilized After a Challenging 2020:
What Comes Next?

Article Summary: The threat to dividend sustainability during 2020 appears to have abated, at least for now. While many companies cut or suspended their dividends, the damage was largely confined to the early stages of the pandemic. There was a critical distinction to be made between dividend growth and high dividend yield strategies. And once the economy began to stabilize, so seemingly did dividends. What comes next?

As we move deeper into 2021, investors face the challenge of finding durable dividends—income sources that are both sustainable and growing. It is likely this idea will be front-and-center in many dividend discussions for the foreseeable future.

ProShares Offers the Largest Lineup of Dividend Growth ETFs

Strategies focused on companies with the longest records of consistent dividend growth can help investors build durable portfolios that may perform well in both strong and turbulent markets. And ProShares offers more dividend growth ETFs than any other company.

ProShares ETF Ticker Index Market Segment
S&P 500 Dividend Aristocrats ETF NOBL S&P 500® Dividend Aristocrats® Index Large Cap
S&P MidCap 400 Dividend Aristocrats ETF REGL S&P MidCap 400® Dividend Aristocrats Index Mid Cap
Russell 2000 Dividend Growers ETF SMDV Russell 2000® Dividend Growth Index Small Cap
Russell U.S. Dividend Growers ETF TMDV Russell 3000® Dividend Elite Index U.S. Total Market
S&P Technology Dividend Aristocrats ETF TDV S&P® Technology Dividend Aristocrats® Index Technology
MSCI EAFE Dividend Growers ETF EFAD MSCI EAFE Dividend Masters Index Developed International
MSCI Europe Dividend Growers ETF EUDV MSCI Europe Dividend Masters Index Developed International
MSCI Emerging Markets Dividend Growers ETF EMDV MSCI Emerging Markets Dividend Masters Index Emerging Markets

Learn More

Visit the Dividend Growers section of ProShares.com for more complete information about the nation's largest lineup of ETFs focused on dividend growth.

This report is intended for general information and should not be used to solicit prospective investors. For more complete information please review the prospectus.

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